[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]



 
STRATEGIC IMPORTANCE OF DIGITAL ECONOMIC ENGAGEMENT IN THE INDO-PACIFIC

=======================================================================

                                HEARING

                               BEFORE THE

 SUBCOMMITTEE ON ASIA, THE PACIFIC, CENTRAL ASIA, AND NONPROLIFERATION

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 19, 2022

                               __________

                           Serial No. 117-98

                               __________

        Printed for the use of the Committee on Foreign Affairs
        
        
        
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       Available:  http://www.foreignaffairs.house.gov/, http://
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                         _____                       


             U.S. GOVERNMENT PUBLISHING OFFICE 
46-522PDF           WASHINGTON : 2022                       
                       
                       
                      COMMITTEE ON FOREIGN AFFAIRS

                  GREGORY W. MEEKS, New York, Chairman

BRAD SHERMAN, California             MICHAEL T. McCAUL, Texas, Ranking 
ALBIO SIRES, New Jersey                  Member
GERALD E. CONNOLLY, Virginia         CHRISTOPHER H. SMITH, New Jersey
THEODORE E. DEUTCH, Florida          STEVE CHABOT, Ohio
KAREN BASS, California               SCOTT PERRY, Pennsylvania
WILLIAM KEATING, Massachusetts       DARRELL ISSA, California
DAVID CICILLINE, Rhode Island        ADAM KINZINGER, Illinois
AMI BERA, California                 LEE ZELDIN, New York
JOAQUIN CASTRO, Texas                ANN WAGNER, Missouri
DINA TITUS, Nevada                   BRIAN MAST, Florida
TED LIEU, California                 BRIAN FITZPATRICK, Pennsylvania
SUSAN WILD, Pennsylvania             KEN BUCK, Colorado
DEAN PHILLIPS, Minnesota             TIM BURCHETT, Tennessee
ILHAN OMAR, Minnesota                MARK GREEN, Tennessee
COLIN ALLRED, Texas                  ANDY BARR, Kentucky
ANDY LEVIN, Michigan                 GREG STEUBE, Florida
ABIGAIL SPANBERGER, Virginia         DAN MEUSER, Pennsylvania
CHRISSY HOULAHAN, Pennsylvania       AUGUST PFLUGER, Texas
TOM MALINOWSKI, New Jersey           PETER MEIJER, Michigan
ANDY KIM, New Jersey                 NICOLE MALLIOTAKIS, New York
SARA JACOBS, California              RONNY JACKSON, Texas
KATHY MANNING, North Carolina        YOUNG KIM, California
JIM COSTA, California                MARIA ELVIRA SALAZAR, Florida
JUAN VARGAS, California              JOE WILSON, South Carolina
VICENTE GONZALEZ, Texas
BRAD SCHNEIDER, Illinois

                                      
                                     
                                     

                    Sophia Lafargue, Staff Director

               Brendan Shields, Republican Staff Director
                                 ------                                

 Subcommittee on Asia, the Pacific, Central Asia, and Nonproliferation

                    AMI BERA, California, Chairman,

BRAD SHERMAN, California             STEVE CHABOT, Ohio, Ranking Member
DINA TITUS, Nevada                   SCOTT PERRY, Pennsylvania
ANDY LEVIN. Michigan                 ANN WAGNER, Missouri
CHRISSY HOULAHAN, Pennsylvania       KEN BUCK, Colorado
ANDY KIM, New Jersey                 TIM BURCHETT, Tennessee
GERALD CONNOLLY, Virginia            MARK GREEN, Tennessee
TED LIEU, California                 ANDY BARR, Kentucky
ABIGAIL SPANBERGER, Virginia         YOUNG KIM, California
KATHY MANNING, North Carolina

                                     
                                        

                      Jamie Morgan, Staff Director
                      
                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Cutler, Ms. Wendy S., Vice President, Asia Society Policy 
  Institute......................................................     7
Bliss, Ms. Christine, President, Coalition of Services Industry..    15
Feith, Mr. David, Adjunct Senior Fellow, Indo-Pacific Security 
  Program, Center for a New American Security....................    26

                                APPENDIX

Hearing Notice...................................................    57
Hearing Minutes..................................................    58
Hearing Attendance...............................................    59

            STATEMENT FOR THE RECORD REPRESENTATIVE CONNOLLY

Statement for the record submitted by Representative Connolly....    60

            RESPONSES TO QUESTIONS SUBMITTED FOR THE RECORD

Responses to questions submitted for the record..................    62

            ADDITIONAL INFORMATION SUBMITTED FOR THE RECORD

Additional information submitted for the record..................    66


                    STRATEGIC IMPORTANCE OF DIGITAL



                ECONOMIC ENGAGEMENT IN THE INDO-PACIFIC

                      Wednesday, January 19, 2022

                          House of Representatives,
                 Subcommittee on Asia, the Pacific,
                 Central Asia, and Nonproliferation
                      Committee on Foreign Affairs,
                                                    Washington, DC.

    The subcommittee met, pursuant to notice, at 10:08 a.m., 
via Webex, Hon. Ami Bera (chairman of the subcommittee) 
presiding.
    Mr. Bera. Virtual gaveled in, and the Subcommittee on Asia, 
the Pacific, and Nonproliferation will come to order.
    Without objection, the chair is authorized to declare a 
recess of the committee at any point. And all members will have 
5 days to submit statements, extraneous materials, and 
questions for the record, subject to the length limitations in 
the rules. To insert something into the record, please have 
your staff email the previously mentioned address or contact 
full committee staff.
    Please keep your video function on at all times, even when 
you are not recognized by the chair. Members are responsible 
for muting and unmuting themselves, and please remember to mute 
yourself after you finish speaking. Consistent with remote 
committee proceedings of H. Res. 8, staff will only mute 
members and witnesses as appropriate when they are not under 
recognition to eliminate background noise.
    I see that we have a quorum and will now recognize myself 
for opening remarks.
    First, I want to thank our witnesses and the members of the 
public for joining today's hearing on the importance of 
strengthening U.S. digital economic engagement with the Indo-
Pacific region. The Indo-Pacific is home to many of our closest 
allies and significant trading partners, with more than 662 
million people, and a combined of $3.2 trillion.
    I have long supported deepening economic relations with our 
Indo-Pacific partners, and I believe we can do that in a way 
that protects and benefits American workers and strengthens the 
U.S. economy.
    I also commend the Biden Administration for its continued 
prioritization of the region and its efforts toward developing 
an Indo-Pacific economic framework.
    Today's hearing focuses on what I hope will be one 
important pillar in the broader economic framework: digital 
trading. The Indo-Pacific region contains the majority of the 
world's internet users and the fastest-growing internet market. 
The pandemic has only further accelerated these trends. U.S. 
companies and platforms remain dominant in this expanding but 
increasingly competitive market, and further U.S. leadership is 
necessary to expand economic opportunities that improve the 
livelihoods of our workers and consumers in the United States 
and beyond.
    As chair of the House Foreign Affairs Subcommittee on Asia 
and the Pacific, I do not intend for this hearing to examine 
what should be encompassed in a digital trade agreement, but, 
rather, I hope our witnesses will help talk about the 
geopolitical, economic, and strategic importance for the United 
States to engage our Indo-Pacific allies and partners on the 
development of standards for the digital economy and 
technology.
    Countries in the region have long been negotiating and 
implementing digital trade policies to stimulate economic 
growth and improve the livelihoods of their citizens. Although 
these conversations occur thousands of miles away, they have 
significant implications for data protection and privacy, trade 
facilitation, and other issues that affect the American people 
and our economy.
    But despite the wide-reaching impact of these agreements in 
today's interconnected economy, the United States is not at the 
table to ensure that the standards and norms being established 
align with our shared democratic principles. Our absence risks 
allowing countries that do not share our pro-worker, pro-
consumer, pro small-business, and pro-environmental values to 
advance digital governance standards empathetical to democratic 
practices.
    We need to engage our allies and partners to advance a 
prosperous Indo-Pacific region that supports a rules-based 
international trading system and high standards that prioritize 
openness and the free flow of data.
    The United States has experienced negotiating digital trade 
chapters, which we did in the U.S.-Mexico-Canada agreement, and 
in the standalone U.S.-Japan digital trade agreement. These 
agreements provide for nondiscrimination, consumer protection 
and privacy and prohibit customs, duties, and technology 
transfer requirements among other obligations.
    Working to lower barriers to digitally enable trade and 
establishing rules that allow for nondiscriminatory competition 
with Indo-Pacific countries will help U.S. companies compete 
more effectively.
    I also want to be clear that this will need to be an 
inclusive process with the consultation of relevant 
stakeholders and groups. But the NAFTA renegotiation process 
demonstrated what is possible when all parties are at the 
table, and there is open dialog and compromises that ultimately 
strengthen the outcome that resulted in USMCA.
    I have had the opportunity to hear from experts with 
differing opinions prior to today's hearing, and I look forward 
to continuing to work and have this conversation with labor and 
environmental groups to ensure that the U.S. digital economic 
engagement with the Indo-Pacific continues to be pro-worker, 
pro-environment, and pro-small business.
    Our competitors are not waiting for us as they continue to 
shape the rules of the digital road in the Indo-Pacific. The 
United States has a unique window of opportunity to 
economically reengage the region on this pivotal issue, and 
work with allies and partners to advance a free, open, and 
prosperous Indo-Pacific underpinned by our shared commitment to 
democratic norms and principles.
    And I look forward to hearing from our witnesses today, as 
well as voices from other stakeholders and relevant industries, 
to ensure that we demonstrate sustained global leadership on 
these important issues.
    Again, thank you to the witnesses and the members for 
participating today.
    I will now yield 5 minutes to my good friend from Ohio, our 
ranking member, Representative Steve Chabot, for any opening 
comments he may have.
    Mr. Chabot. Thank you, Mr. Chairman. And I want to thank in 
advance the witnesses for sharing their insights with us here 
this morning.
    It is hard to overestimate, as you have indicated, the 
strategic importance of the Indo-Pacific. The region accounts 
for about a third of global economic activity, has huge growth 
potential. With over half of the world's population and a 
youthful population at that, the region is poised to become an 
engine of global economic growth over the coming decades.
    Moreover, the countries throughout the Indo-Pacific are 
hungry for trade, with the U.S., with each other, and with the 
rest of the world, and the world is hungry for trade with them. 
A free and open Indo-Pacific is critical to the U.S.'s economic 
future, as many of our largest trading partners are in the 
region, and there is enormous potential to grow those ties.
    While the U.S. has strengthened our trade pacts with South 
Korea and Japan and developed bold standard rules on digital 
trade through the USMCA, we cannot rest on our laurels, but 
that is exactly what we are doing as Beijing continues to 
pressure Indo-Pacific countries to trade their sovereignty for 
the Chinese Communist Party's so-called common destiny, while 
we fail to provide a clear option for these countries to turn 
to.
    Let me be blunt, Mr. Chairman, this Administration has no 
meaningful agenda for economic statecraft in Asia right now, 
and I say that with great remorse because we ought to be 
working together on this. And I know you and I are.
    This brings me to the topic of today's hearing, the digital 
economy, which is comprised of the emerging tech, like AI, 
advanced semiconductors, and 5G. It is critical to superpower 
status in geopolitical competition. And this 21st century 
economic engine runs on data, a resource with infinite supply. 
Sustained and enhanced U.S. leadership in digital trade and 
innovation benefits not only our economy and work force, but 
our national security and economic well-being. That is why 
writing the rules around data and digital trade are so 
consequential. And, fortunately, we have templates in the U.S.-
Japan trade agreement and in USMCA that would provide an ideal 
starting point for a high-quality deal.
    That is why I was pleased to join you, Mr. Chairman, in 
leading a letter to USTR to ask that they move toward such a 
deal. From Zoom meetings to online shopping, to the increasing 
use of big data and AI in manufacturing sectors, the digital 
economy will only grow in importance to U.S. economic success.
    All of these factors make the timing so appealing for a 
digital trade agreement in the Indo-Pacific. The consequences 
of inaction on digital trade with the region could be dire, as 
data and the digital economy are a matter of the utmost 
importance to Xi Jinping. The CCP, the Chinese Communist Party, 
grasps the value of data and is using it to coerce and control 
its trade partners. Over many years, the CCP has passed laws, 
regulations, and standards that give it control over the data 
of its companies and citizens, while at the same time, scouring 
the globe to funnel data back to China.
    While we think a lot about ports and national resources, 
unfortunately, we have been too much asleep at the wheel as the 
world's most valuable resource, data, pours into the PRC every 
single day. That needs to change.
    Mr. Chairman, it is time for us to get our heads in the 
game. And I agree with you that the best way to do this is to 
negotiate and conclude a digital trade agreement.
    While I do have to admit that a digital sector agreement is 
a poor substitute for being part of the more comprehensive 
regional agreement, it is an excellent place to start building 
U.S. economic ties with our partners throughout the region.
    Let me close with this: Across the Indo-Pacific, countries 
are hungry for more trade with the U.S., and we can achieve 
major foreign policy wins by meeting that demand. For example, 
Taiwan wants a trade deal so much that they finally allowed 
U.S. pork imports after years of delay. But whether it is 
digital trade or Taiwan, the Administration, unfortunately, has 
ignored the demand for real trade deals. Instead, they are 
poised to offer regional economic framework, which simply 
cannot meet the needs of the moment.
    Let's hope the President decides to negotiate something 
more substantial, or I am afraid Americans will end up having 
to play by rules that were written in Beijing.
    And I yield back.
    Mr. Bera. Thank you, Ranking Member Chabot.
    Let me now introduce our witnesses.
    First we have Ms. Wendy Cutler, Vice President at the Asia 
Society Policy Institute. Ms. Cutler served for nearly three 
decades as a diplomat and negotiator in the Office of the U.S. 
Trade Representatives, where she also served as Acting Deputy 
U.S. Trade Representative.
    Next, we have Ms. Christine Bliss, President of the 
Coalition of Services Industry. Prior to CSI, Ms. Bliss was 
Assistant U.S. Trade Representative for services, investment, 
telecommunications, and e-commerce.
    Last but not least, is Mr. David Feith, adjunct senior 
fellow of the Indo-Pacific Security Program at the Center for a 
New American Security. He served as U.S. Deputy Assistant 
Secretary of State for East Asian and Pacific Affairs from 2020 
to 2021.
    I thank you all for participating in today's hearing.
    I will now recognize each witness for 5 minutes. Without 
objection, your prepared written statements will be made part 
of the record. I will first invite Ms. Cutler for her 
testimony.

STATEMENT OF MS. WENDY S. CUTLER, VICE PRESIDENT, ASIA SOCIETY 
                        POLICY INSTITUTE

    Ms. Cutler. Well, thank you, Chairman Bera and Ranking 
Member Chabot, and distinguished members of the subcommittee. I 
am honored to have the opportunity to appear before you today, 
even if virtually.
    As this subcommittee fully appreciates, the United States 
must strengthen its economic engagement in the Indo-Pacific. 
Given the trajectory of regional economic growth and 
innovation, U.S. prosperity is closely tied to the Indo-Pacific 
for the years to come. Without a robust regional economic 
agenda, the United States risks foregoing economic 
opportunities, and also becoming increasingly marginalized as 
the region forges a new future without us.
    Furthermore, economic engagement will help strengthen U.S. 
credibility and influence in this pivotal region. Security 
partnerships alone will not achieve that. It is, therefore, 
encouraging that the Administration is now developing an Indo-
Pacific Economic Framework.
    Since the United States exited the TPP, our regional 
partners have not slowed down. In fact, the recent two regional 
comprehensive trade deals, CPTPP and RCEP, should serve as a 
wake-up call for Washington. And China's recent application to 
join the CPTPP is a potential game-changer and must be taken 
seriously. If the United States does not step up its economic 
game, CPTPP accession negotiations for China will become the 
most consequential negotiation in the region with the United 
States again sitting on the sidelines.
    And our Indo-Pacific partners are also actively pursuing 
negotiations in the digital space. In addition to a series of 
bilateral trade agreements, Singapore, New Zealand, and Chile 
have concluded a partnership agreement which could become a 
platform for a broader regional deal, with Korea and China 
expressing interest in joining.
    And now to turn to China, which is building a very 
different digital future. Indeed, Xi Jinping has described tech 
innovation as the main battleground of the global playing 
field. Just last week, China's State Council released an 
ambitious and detailed 5-year plan on digital aimed at 
bolstering the role of these technologies in its economy with 
goals related to broadband access, digital infrastructure, and 
emerging tech research. And, moreover, the plan lays out 
Beijing's international intentions, including partnering with 
ASEAN and the EU, as well as becoming more active on digital 
matters in international organizations.
    China's goal is to leverage its gravitational pull of its 
economic heft to create a favorable international environment 
for its own digital vision, including policies related to cross 
border data flows, data privacy, and to the promotion of China-
driven technical standards. And let's keep in mind that China's 
digital future includes worrying efforts to manage access to 
information, constrain dissent, and carry out monitoring and 
repression of certain populations.
    The United States must work with like-minded countries to 
shape an affirmative alternative to the Chinese approach that 
advances democratic norms, including transparency, openness, 
inter-operability, and fairness. And, in my view, there is no 
better way to do this than by shaping a robust and forward-
leaning digital pillar as the centerpiece of the Indo-Pacific 
economic framework.
    Now, there are various approaches for doing this, but I 
believe the United States would be best served by proposing a 
new paradigm, and this would involve lifting the most 
meaningful, inclusive, and impactful elements from existing 
trade agreements, including the USMCA, while adding new 
features to promote digital inclusiveness, strengthen consumer 
confidence and trust, and protect personal information.
    The goal should be to ensure that the outcomes serve the 
interests of our workers, consumers, and businesses of all 
sizes, particularly SMEs. And, moreover, a digital economy 
pillar should be sufficiently flexible to take on the 
challenges presented by new trends and technologies, including 
AI and worker force skill development.
    In pursuing such an approach, extensive consultations with 
Congress and all stakeholders are critical in order to get this 
right. And to be impactful as possible, an agreement should 
include flexibilities to cast a wide net for potential 
membership, particularly in Southeast Asia where tech is 
booming and Chinese tech companies have been aggressively 
expanding their presence in recent years.
    In conclusion, Mr. Chairman, a bold, meaningful, and 
impactful, and inclusive Indo-Pacific economic framework with a 
strong digital pillar could go a long way in reasserting U.S. 
leadership and influence in the region; but time is of the 
essence. We need to move now to help shape the economic future 
of the region, or risk becoming observers as others do.
    Thank you.
    [The prepared statement of Ms. Cutler follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

       Mr. Bera. Thank you, Ms. Cutler.
    I will now recognize Ms. Bliss for her testimony.
    I do not know if your camera is on, Ms. Bliss. There it is. 
Great.

STATEMENT OF CHRISTINE BLISS, PRESIDENT, COALITION OF SERVICES 
                            INDUSTRY

    Ms. Bliss. Chairman Bera, Chairman Meeks and Ranking Member 
McCaul, as well as subcommittee Ranking Member Chabot, and 
distinguished members of the subcommittee, I appreciate the 
opportunity to participate in today's hearing to discuss the 
strategic importance of digital economic engagement in the 
Indo-Pacific.
    My name is Christine Bliss. I am president of the Coalition 
of Services Industry, and we represent services and digital 
firms on services and digital trade issues. Our members include 
firms that provide information technology services, financial 
services, logistics, media and entertainment, distribution, and 
professional services.
    I want to note at the outset that CSI supports the Biden 
Administration intention to develop an Indo-Pacific framework 
to renew U.S. leadership in the world's fastest growing region, 
as you noted, Mr. Chairman, in your opening remarks. We believe 
that all potential aspects of the IPEF, including digital 
trade, sustainability, supply chain, resilience, and labor are 
all important. However, in line with the topic of today's 
hearing, my testimony focuses on the significance of the 
digital economic engagement pillar.
    An Indo-Pacific trade agreement has received bipartisan 
congressional support, thanks to the leadership of this 
committee and you, Mr. Chairman, and other Members of Congress 
that recognize the strategic imperative of taking swift action 
to reassert U.S. leadership in the region.
    I would also note, as you did, Mr. Chairman, in your 
opening remarks, that I believe that USMCA provides a positive 
process and precedent for the IPEF in light of its broad, 
bipartisan support, and robust stakeholder engagement, 
including with the labor community and others.
    As Ms. Cutler noted in her testimony, and you did in your 
opening remarks and Ranking Member Chabot's opening remarks, 
digital engagement in the Indo-Pacific region is an urgent 
exercise.
    First, expansion of services in digital trade with the 
region is critical to supporting existing and future jobs and 
services in digital sectors in the United States, as well as in 
supporting manufacturing and other key sectors of the U.S. 
economy.
    And this is not just about moving the interests of large 
U.S. services and digital firms and professional workers. It is 
also about creating new opportunities for the 52 million U.S. 
workers in services occupations earning middle class wages, 
which can benefit from the creation of new jobs in digital and 
digitally enabled services, and to their participation in 
supply chains.
    It is also vitally important to micro-, small and medium-
sized businesses which increasingly depend on access to 
broadband, internet platforms, and the latest digital 
applications in the cloud to expand their domestic and 
international reach.
    Second, digital engagement in the region is essential to 
combat rising protectionism, even among our closest allies in 
the region. Data localization and data residency requirements 
are proliferating, and they do not only pose major trade 
barriers, but they also enable increased authoritarian 
influence, censorship, and surveillance, and leave networks 
vulnerable to cybersecurity risks.
    U.S. engagement in the region's digital economy is also 
important to counteracting China's protectionist and 
authoritarian whole-of-government approach to shaping the rules 
of the road on digital trade.
    Ms. Cutler alluded to the recently announced 5-year plan by 
China to even tighten its grips on data sovereignty and to 
expand its reach on digital policies internationally.
    China also recently concluded the RCEP and had a great 
influence on the standards on digital trade in that regard, 
which were incredibly weak. And this is important because RCEP 
is the world's largest trading block, accounting for 30 percent 
of global GDP.
    China's application to accede to regional agreements like 
CPTPP and the digital economy partnership are also of great 
concern.
    Additionally, as has been noted, U.S. allies, like Japan, 
the U.K., Australia, Singapore, New Zealand, Korea, and other 
nations are expanding their digital networks while the U.S. is 
not, and is at serious risk of being left behind. In the words 
of Singapore's Deputy Prime Minister, Heng See Keat, the U.S. 
cannot afford to be absent from the regions involving the 
economic architecture, if not through CPTPP, then it must have 
an equally substantial alternative.
    Finally, the digital aspects of IPEF and any associated 
digital agreement should include world class digital provisions 
applying to all services sectors. It should promote worker 
skill training, particularly for women, small businesses, and 
historically marginalized communities. The IPEF should be 
accompanied by a regional digital agreement with like-minded 
allies, including Japan, Singapore, Australia, New Zealand, and 
Korea and should be binding and enforceable.
    My written testimony also includes an annex recommending 
specific provisions to be included in such an agreement.
    In conclusion, Mr. Chairman, I thank you for the 
opportunity to testify today and appreciate the subcommittee's 
attention to these critical issues.
    [The prepared statement of Ms. Bliss follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
    
    Mr. Bera. Thank you, Ms. Bliss.
    I now invite Mr. Feith for his testimony.

 STATEMENT OF DAVID FEITH, ADJUNCT SENIOR FELLOW, INDO-PACIFIC 
      SECURITY PROGRAM, CENTER FOR A NEW AMERICAN SECURITY

    Mr. Feith. Thanks very much, Chairman Bera, Ranking Member 
Chabot, and all the distinguished subcommittee members. I 
appreciate very much the opportunity to speak with you about 
digital trade with the Indo-Pacific, and, more broadly, the 
strategic importance of data rules.
    I wish to stress three main points today:
    First, a U.S. digital trade agreement in the Indo-Pacific 
would indeed serve American interests economically and 
strategically.
    Second, such an agreement is, by no means, all that is 
needed. Our country should improve our overall approach to 
digital trade, starting by curbing the massive and currently 
unregulated frozen sensitive data from the United States to 
China.
    Third, U.S. diplomacy should seek to cooperate with allies 
on both of these tracks, to expand digital trade among friends 
and to limit it with China.
    The case for expanding U.S. digital trade in the Indo-
Pacific is strong, as we have heard, because digital trade is 
important, and the Indo-Pacific is important. There are various 
ways that we can craft better digital trade rules in the Indo-
Pacific and, as we have discussed, the general contours of a 
desirable deal are visible from previous U.S. agreements. 
Parties would agree not to impose tariffs on each other's 
digital content; parties would agree not to force technology 
transfers as a condition of market access; parties would agree 
in general to open cross border data flows, meaning they would 
limit data localization. The more that our Indo-Pacific allies 
partners honor rules like these, the better for regional 
economic development and for U.S. interests.
    There are notable risks in our current approach, however. 
It is not nearly enough to expand digital trade with our 
partners. We also need to limit our digital trade with China. 
Our most urgent digital trade challenge, in fact, may not be in 
the Indo-Pacific, but at home. It is how to begin placing 
overdue national security controls on data flows to and from 
China.
    China's approach to digital trade has long been far more 
strategic, mercantilist, and nonreciprocal than U.S. policy has 
recognized. The Chinese Communist Party has developed 
comprehensive strategy to control, accumulate, and exploit 
data, data such as personal health records, personal genetic 
sequences, and personal online browsing habits; data such as 
corporate trade secrets, corporate supply chain records, and 
corporate financial accounts; data such as the photos, voice 
recordings, and mapping imagery pulsed through phones, drones, 
and smart cars all throughout the world.
    Beijing recognizes that the competition for global 
influence in the 21st century will require protecting and 
harnessing this data to achieve commercial, technological, 
military, and intelligence advantages. And that is what it is 
doing.
    As we have heard, Beijing has built a latticework of laws 
and regulations to make the Chinese Communist Party effectively 
the world's most powerful data broker. This has a huge impact 
on foreign firms operating in China. Not only must their 
Chinese data stay in China and be accessible by the Chinese 
State, but Beijing now demands control over whether they can 
send it to their own headquarters, or to a corporate lab in, 
say, California, or to a foreign government that has made a 
lawful, regulatory, or law enforcement request.
    Beijing's approach is nakedly nonreciprocal. It relies on 
access to data from foreign countries while denying foreigners 
access to data from China. In China, Beijing controls the data 
of foreign companies. Outside of China, Chinese companies 
operate comfortably, creating and accessing valuable new data 
sets prime for easy transfer back to China in all manner of 
data-intensive fields, biotech, pharma, medical devices, 
drones, autonomous cars and trucks, social media, digital 
payments, e-commerce, and more. These data flows to China 
contain massive quantities of American information.
    All of this is the stuff of digital trade, yet there are 
effectively no rules governing any of it. In this environment 
for upwards of a generation, Beijing has been coldly effective 
in designing a strategy of global data mercantilism: data 
hoarding for me, data relinquishing for thee.
    The Biden Administration has spoken about the importance of 
data in our competition with China, but no visible strategy has 
yet emerged. The U.S. Government traditionally has no mechanism 
for limiting cross-border data flows, even on national security 
grounds.
    When an American teenager wants to download a Chinese 
social media app onto her phone, or a U.S. university wants to 
exchange biotech research with a Chinese university, or U.S. 
State Government wants to use Chinese drones for power grid 
surveillance, the U.S. Government has no way to regulate this 
activity to protect American important interests.
    Washington is beginning to address this gap only recently 
due to creation, at least on paper, of the new ICTS regulatory 
regime for reviewing cross-border data flows. But the ICTS 
process has not yet been put to use. Apart from ICTS, the 
Congress could, of course, consider legislative approaches, and 
various bills have been proposed to limit the ability of 
Chinese social media apps to operate and collect data in the 
U.S., but without success.
    Another idea is to create a new export control regime that 
would restrict bulk personal data from going to foreign 
adversaries, but that, too, has not garnered much apparent 
support.
    I will close by noting quickly how, as we struggle to 
develop new standards for our own digital trade with China, it 
will be difficult to harmonize our approach with partners 
overseas. But overcoming this challenge is essential if we are 
to create a favorable global digital order.
    We have discussed China's interest in joining the CPTPP. 
China wants to do so chiefly to influence its currently high 
standards and to protect, thereby, China's more mercantilist 
and authoritarian interests. CPTPP members have a veto over 
this and should use it.
    Important as it is, however, to keep Beijing from entering 
CPTPP against the rules will hardly be sufficient for shaping 
the future of trade in Asia. As we have said, fashioning a high 
standard Indo-Pacific digital trade agreement would be a good 
step, and so would begin to impose reasonable national security 
restrictions on U.S.-China data flows.
    The concept that combines these two elements, digital trade 
expansion with friends and digital trade limitation with 
rivals, is what former Japanese Prime Minister Shinzo Abe 
called Data Free Flow with Trust. We should maximize data trade 
with those we can trust, and limit data trade with those we 
cannot. This will not be easy, given China's size, strength, 
and deep integration into our digital economy and that of our 
allies, but it is necessary.
    Our responsibility now, now that we recognize increasingly 
that data is a strategic resource, is to design a global 
digital trade order that reflects democratic values and not 
Beijing's.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Mr. Feith follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
    
    Mr. Bera. Great. Thank you.
    I will now recognize members for 5 minutes each. And 
pursuant to House rules, all time yielded is for the purposes 
of questioning our witnesses.
    Because of the virtual format of this hearing, I will 
recognize members by committee seniority, alternating between 
Democrats and Republicans. If you miss your turn, please let 
our staff know, and we will circle back to you. If you seek 
recognition, you must unmute your microphone and address the 
chair verbally.
    With that, I will start by recognizing myself.
    Again, I appreciate the work that the ranking member, Mr. 
Chabot, and I have been doing on this, as well as the other 
subcommittee members.
    And, Ms. Cutler, your opening testimony--I know both of us 
worked together during the Obama Administration to get TPA 
passed and TPP. And, you know, it was a somewhat contentious 
deal and, ultimately, we did not get it across the finished 
line.
    That said, in the last Administration, you know, there was 
a lot of work on the renegotiation of NAFTA. All parties were 
brought to the table. I have had conversation with some of the 
labor negotiators and others, and everybody did not get what 
they wanted, but it did demonstrate a process and, ultimately, 
led to a strong bipartisan vote where I think in the House, 
there were more House Democrats that actually voted for that 
bill than House Republicans.
    So it does show an open process with all stakeholders at 
the table, labor, environmental groups, you know, the business 
community, and others, that we can actually get a trade deal 
across the finish line. So it is, again, something that we are 
very supportive of the Biden Administration pursuing.
    Maybe the first question would go to Ms. Cutler. You 
outlined a few of the existing policies. There is a digital 
trade capture in the USMCA. There is the bilateral that we have 
between the United States and Japan. You also touched on the 
Singapore, New Zealand, Chile deal, which, you know, seems to 
be a more modular deal. If you can expand on these different, 
you know, options and potentially where a good starting point 
would be?
    Ms. Cutler. Yes. So as you mentioned, there is so much 
digital activity going on in the region. Singapore has really 
been instrumental in seeking bilateral agreements with other 
countries, and they recently concluded a deal with Korea. At 
the same time, Singapore is part of this regional effort with 
Chile and New Zealand with this so-called Digital Economy 
Partnership Agreement.
    And I think all of--these agreements in the region without 
us, as well as drawing from the USMCA and U.S.-Japan Bilateral 
Digital Agreement, really provides a great starting point for 
the United States. I do not think we should dock on to any of 
the agreements in the region, because I think they all need to 
be updated and improved and reflect more effectively labor and 
consumer concerns that we are hearing in the United States.
    But my sense is that our regional partners and allies are 
very excited about working with us in this area. They are not 
waiting for us, but they are welcoming.
    Mr. Bera. Great. Thank you for that.
    I have to, you know, second that. I cannot have a 
conversation with Australians or our friends in New Zealand or 
Singapore or Indonesia without this topic coming up, and there 
really is a strong desire in the region for the United States 
to engage and help come up with a high-standard agreement that 
really does set the rules of the road.
    Mr. Feith, you talked a little bit about some of the risks, 
you know, what China is doing in terms of data privacy and the 
like. Can you outline, you know, or maybe expand on the risks 
that we face if we do not actually set a high standard, you 
know, trade deal?
    Mr. Feith. Certainly. The risks if we fail to set standards 
in the region include that China's model, which it inherently 
uses to exert influence over not just foreign companies, but 
foreign countries, the approach of foreign countries to not 
just matters of economics and trade, but also, you know, 
matters of political and foreign policy decisionmaking, Beijing 
will have a freer hand to dictate terms. They can do that 
either by getting inside these institutions, as we have 
discussed. If these institutions, like CPTPP, do not hold by 
their own standards, if they were, over the years, to be 
pressured by Beijing to make the decision that, even though it 
would, frankly, make nonsense of the rules and standards that 
CPTPP is supposed to stand for, to bring in China when China's 
data regime is what it is, when China's labor regime is what it 
is, when its approach to State-owned enterprises is what it is. 
But, obviously, these forces are subject to politics. And 
Beijing will indeed be pressing to work its way in both inside 
these institutions, or from the outside, if the institutions 
are not sufficiently strong, Beijing will be able to exert 
itself on other countries and will not have the collective 
market and, sort of, policy power of these countries working 
together in these trade blocks exerting influence on Beijing, 
which over time we would prefer.
    Mr. Bera. I have noticed my time has expired, so thank you 
for that.
    Let me go ahead and recognize the ranking member, Mr. 
Chabot, for 5 minutes.
    Mr. Chabot. Thank you, Mr. Chairman.
    Mr. Feith, I will begin with you.
    Neither this Administration, nor the previous one, showed 
particular interest in new trade deals in the Indo-Pacific. 
That has essentially left the State Department to champion 
economic engagement, which it has been attempting to do, but 
without the heft of the USTR.
    What opportunities are we missing in the region with the 
White House holding USTR on such a tight leash?
    Mr. Feith. Well, thanks for that, Congressman Chabot.
    The experience that I had in Singapore reflected very much 
what you said, and I will say, to the extent that we are 
speaking broadly about economic engagement with the Indo-
Pacific, it is worth noting that, you know, in addition to the 
tools that we have, formal trade negotiation tools that 
obviously are led by USTR, in addition to some of the general 
economic and diplomacy tools that are wielded by the State 
Department, there are additional very important tools, 
including some that have been sharpened and strengthened by 
this committee over the years, to include the International 
Development Finance Corporation, and the Eximbank. These are 
both also important for making sure that American trade 
investment in this vital region are as substantial as possible 
and, therefore, American influence is, too.
    But I think, as your question suggests, there is still a 
power in broad trade deals properly negotiated that can be, you 
know, among the strongest tools that we have. And it is 
interesting the ways that in different Administrations and 
sometimes with continuity across Administrations, the dynamics 
between the White House, USTR, and State function.
    One thing we observed in the last Administration with some 
interest was questions about whether the bandwidth constraints 
of USTR, in terms of personnel and the number of hours in the 
day, could be mitigated through personnel transfers where, you 
know, larger parts of the government, like the State Department 
or others, could lend personnel to build out trade missions, 
the ability to visit more countries and have more negotiations.
    Those were, I think, interesting issues which merit 
additional consideration if I could suggest that.
    Mr. Chabot. Thank you.
    Let me ask you this: What consequences do we face if we 
fail to compete with China in the trade arena, relative to our 
economy, to strategic competition more generally? I will just 
leave it there.
    Mr. Feith. Well, you know, China under Xi Jinping has a 
fundamentally different view of the future of the world than we 
do, and that our allies and partners all around the world do. 
They have a, frankly, intensely adversarial and hostile view 
toward our interests and our values.
    So to the extent that we accede competitive ground to them, 
to the extent that we let them continue to advance in their 
economic and technology goals without competing properly, 
without making power cells more resilient against their 
subversion, without making our allies and partners stronger and 
more resilient in that fashion, the consequences could be 
absolutely severe for control in generally in Asia, and 
globally.
    Mr. Chabot. Thank you.
    Ms. Bliss, let me try and get a question, one more in here. 
History shows, I believe, that the wealthiest countries tend to 
be those that have been successful in the trade arena.
    Could you discuss some of the economic benefits of the U.S. 
if we could negotiate a digital trade deal with countries in 
the Indo-Pacific?
    Ms. Bliss. Absolutely. Thank you, Congressman Chabot.
    So it is critically important for services and digital 
trade and the firm--services and digital firms that I 
represent, and, more broadly, in the economy, but also because 
those firms also support other economic sectors, like 
agriculture, like manufacturing.
    And as I think you noted in your opening remarks, there is 
tremendous growth potential in the Asia Pacific, particularly 
in countries like Malaysia and Vietnam, Indonesia. And so, the 
digital aspect of that is very, very important to creating and 
supporting U.S. jobs in digital and digitally enabled services-
related areas.
    Just to give you an example, U.S. services digital exports 
are $500 billion. Out of that, just in the Asia Pacific, $180 
billion in services exports, $124 billion of that total are 
digital. And that is just the beginning. We believe there is 
tremendous growth potential there in that regard.
    So the benefits of tapping into the region with strong 
digital rules are tremendously important and, as I noted, not 
just to the large firms and services in digital trade, but 
also, to the smaller firms, in particular, that rely on digital 
tools to expand their reach to domestic and to global markets 
and, particularly, women and minorities. 90 percent of minority 
businesses are small businesses. And so the benefits, I think, 
are quite large.
    If I can add a couple of things to, I think, a question 
that you asked and also that the chairman asked, in terms of 
the consequences of not having a strong Indo-Pacific strategy 
in counteracting China, also include the fact of China's 
widening influence in multilateral institutions, whether it is 
the WTO, APEC, or the ITU and in standard settings bodies in 
particular.
    So, an Indo-Pacific digital agreement, MOU, whatever form 
it would take, should include addressing standards for 
digitally enabled services, because that is another area where 
we really face a huge challenge from China.
    And then, finally, I also wanted to emphasize, with respect 
to China, that China heavily influenced the outcome in the RCEP 
negotiations. And as a result, the digital disciplines are, 
unfortunately, full of exemptions, and they are quite weak, 
particularly in areas such as data localization, restrictions 
on cross-border data flows, and provisions that champion 
domestic industries.
    So we do not want that to become the model throughout the 
Asia Pacific region. So I know I went beyond the specific 
outlines of your question, but I just wanted to add a couple of 
points to the question that you and the chairman raised.
    Mr. Chabot. Thank you.
    Mr. Bera. The gentleman's time has expired.
    Let me go ahead and recognize the gentleman from 
California, Mr. Sherman, for 5 minutes of questioning.
    Mr. Sherman. I would ask that you go to the next Democrat 
and have me be the Democrat after that.
    You are muted, Mr. Bera.
    Mr. Bera. Let me recognize the gentleman from Michigan, Mr. 
Levin, for 5 minutes of questioning.
    Mr. Levin. Thanks so much, Mr. Chairman. This is a really 
important hearing.
    I want to focus on some of the privacy concerns associated 
with the digital trade components of the agreements we have 
been discussing here today.
    Today's tech giants have a nearly unfettered ability to 
collect, store, transfer, and use personal data from their 
customers around the world for their own profit. The U.S. has 
thus far failed effectively to regulate the tech sector here at 
home to ensure that consumer privacy rights are protected, 
particularly compared to European data regulations.
    Ms. Bliss, in your testimony, you express support for a, 
quote, ``U.S. led high standard digital trade agreement in the 
Indo-Pacific region,'' end quote.
    Could you expand on what those high standards would look 
like in practice, particularly when it comes to privacy rights, 
please?
    Ms. Bliss. Well, thank you, Congressman.
    I think that you are absolutely right that privacy 
protection is extremely important, and I will say that I think 
action on Federal privacy legislation is very important as part 
of that and as a foundation to address the patchwork of State-
level privacy laws that exist now.
    So just foundationally, I think that is an important point.
    I think that there are important privacy-related provisions 
that have been included in the USMCA and other agreements----
    Mr. Bera. Ms. Bliss, if you could turn your camera on.
    Ms. Bliss. Sorry about that.
    I do think there are important provisions that have been 
included in previous digital provisions, agreements such as 
USMCA, the U.S.-Japan agreement, for example, ensuring that 
parties have an adequate privacy framework domestically. I 
think----
    Mr. Levin. Could I just ask you, Ms. Bliss, does your 
organization represent the big tech companies, the tech giants 
of the United States? Are they part of your organization?
    Ms. Bliss. There are--I do have a number of tech companies 
that are members. They are not the majority of my membership by 
any means; but, yes, they are included.
    Mr. Levin. Some of, like, Alphabet and whatever Facebook 
calls itself now, or Apple, or, you know, Amazon, any of those?
    Ms. Bliss. Not Apple, but yes, I do have.
    Mr. Levin. Does your coalition support European privacy 
protections?
    Ms. Bliss. No, we have not taken a position on that.
    Mr. Levin. I see.
    Ms. Bliss. However, we have been of the view that it is 
possible to ensure privacy protection in a way that recognizes 
the European right to enforce the GDPR, in terms of working out 
trade rules, digital trade rules with respect to cross-border 
data transfer.
    Mr. Levin. OK. Let me try to get in one more question. That 
is helpful. Thank you.
    So U.S. competition with China obviously looms large in 
this discussion, particularly in terms of setting standards, 
the rules of the road for future digital trade norms and 
practices. And, obviously, China's own initiatives in its 
participation in multilateral agreements are already shaping 
the digital trade sphere as some of you have said.
    Let me ask, Ms. Cutler, how can we ensure that U.S. 
engagement in digital trade and future agreements does not 
perpetuate a race to the bottom in terms of competitive 
business standards? And what policies or norms would you 
suggest that we champion in digital trade agreements that would 
allow us to compete effectively with China but still protect 
consumer rights, the privacy rights I was talking about before?
    Ms. Cutler. Well, thank you, Congressman Levin.
    That is a good question, and I emphasize in my testimony 
that I really think we need an affirmative agenda here. This is 
not about--we should not just focus on countering China, but 
let's set the stage for what is important to us. And protection 
of data is important. Cross-border data flows is also 
important. Digital inclusiveness is important. The norms of 
nondiscrimination and fairness is important.
    So, in my view, that is kind of the approach we should 
take. Of course, in the back of our minds is China, but that 
cannot be the driver. We should, again, assert an affirmative 
positive agenda, and I think that will gain a lot more traction 
in the Indo-Pacific region with our allies and partners and, 
frankly, other countries that are kind of sitting on the fence.
    Mr. Levin. All right.
    Thanks, Mr. Chairman. Looks like my time has expired. I 
yield back.
    Mr. Bera. Thank you.
    Let me now recognize the gentleman from Pennsylvania, Mr. 
Perry, for 5 minutes of questioning.
    Mr. Perry. Thank you, Chairman Bera.
    For any of our panelists who might want to answer, I would 
like to glean a little more information as to the expectations 
for a bilateral trade agreement with Taiwan. I mean, given the 
fact that Taiwan has repeatedly demonstrated its good faith 
interest in negotiating with the United States, what do you 
think is the appetite within the Biden Administration for a 
free trade agreement with Taiwan? And do you think we can 
expect anything like that within the next few years? Any 
panelist that wishes to answer that.
    Ms. Cutler. Perhaps I will take a shot at it, and I cannot 
speak for the Biden Administration, and I do not know exactly 
where they are in these discussions. But what I have gleaned 
from my conversations with Administration officials is that 
there is a real commitment to strengthen, expand, and deepen 
our economic relations with Taiwan. And just in the past year 
we have seen, for example, USTR reinvigorate the TIFA, the 
Trade Investment Framework Agreement, set up working groups. We 
have seen the State Department and Commerce also set up 
bilateral channels dealing with supply chains, technologies, 
green technologies, et cetera.
    So I think there is robust and unprecedented economic 
engagement with Taiwan. And, again, I cannot speak, you know, 
is that sufficient or is the Administration envisioning, you 
know, that at some point maybe, when they are ready to do free 
trade treatments, that they would look to Taiwan to conclude 
such an agreement.
    Mr. Perry. Okay. Thank you.
    Anybody else wish to weigh in?
    Ms. Bliss. I would just--Congressman, I would just say I 
would agree with Wendy's assessment that I think that given the 
current Administration's reluctance to at least at this point 
proceed with trade agreements, probably that may not be 
realistic in the near term to expect. However, as Wendy pointed 
out, there has been a much higher level and interest in 
engagement in various ways with Taiwan, which I think is 
encouraging.
    So that seems to be the likeliest outcome, at least in the 
near term.
    Mr. Perry. All right. I mean, I appreciate the sentiment. I 
just--I feel like we are tiptoeing--and, look, you are just 
here to help inform us, but we are tiptoeing around the 
circumstance with Taiwan and China trying to not offend China; 
at the same time, China has no problem offending us or the rest 
of the world, and we have got a great trading partner right 
next door that has been honest and true with us all along, and 
I just--personally, I do not--I think we ought to be more 
robust and forceful in that.
    But given maybe what I would the consider the 
Administration's dithering establishing trade policies in the 
Indo-Pacific, and to me, that maybe indicates a lack of 
consensus among U.S. officials, but do you guys think that 
individual trade agreements, digital trade agreements with some 
of the friendly partner nations is a plausible way to go as 
opposed to something far more reaching?
    You know, do you think that that is--do you think that the 
individual trade agreements is what we really have to hope for 
with some of these more allied countries to us?
    Ms. Bliss. Congressman, I would just respond by saying that 
it appears that the Administration is pursuing bilaterally with 
some key allies in the region, whether it be Singapore or 
others, that be making a visit to Indonesia and have been in 
Indonesia, and will be going to ASEAN.
    So that seems to be the approach, bilateral approach. 
However, I think from our perspective, we would hope, at least 
with respect to digital trade, that there would be the prospect 
for a regional digital agreement to avoid a patchwork of 
agreements that could have differing standards.
    I think there are obviously negative commercial 
implications of that of having differing standards, but there 
is also, I think, the China angle too, which is, I think, a 
regional digital agreement would have stronger force and the 
ability to counteract some of the negative policies that we 
have been talking about with respect to China.
    So, again, I think it is a preference rather than a 
reflection of where the Administration is. But I think, from 
our perspective, we would hope that there is the possibility of 
doing a regional Asia Pacific digital agreement, at least 
initially, with like-minded countries.
    Mr. Perry. Well, I sure hope so. I agree with you. I think 
that the regional framework is what we are seeking. You just do 
not know if it is possible. And I am just wondering if the 
individual agreements, where you get started with something, 
would set the tone for a regional framework even though you did 
it piece by piece by piece. It is not optimal, but at least we 
can get there.
    So I appreciate your input.
    Mr. Chairman, I yield back the balance.
    Mr. Bera. Great. Thank you.
    Let me now recognize the gentleman from California, Mr. 
Sherman, for 5 minutes of questioning.
    Mr. Sherman. Thank you. And thank you, Mr. Chairman, for 
holding this hearing.
    First, I want to emphasize that while there is a lot of 
support for rejoining TPP here in Washington, TPP is DOA with 
the American people. We saw this in 2016, where every 
Presidential candidate opposed TPP, and the people voted for 
the Presidential candidate who seemed most passionate in his 
opposition. In 2020, no Presidential candidate thought that 
they could sell TPP to the American people.
    So we should be focusing here, and I think we are focusing 
here, on specific agreements dealing with digital because the 
American people probably cannot be convinced that goods made at 
35 cents an hour in Vietnam should have free access to the U.S. 
market over the dead bodies of the labor leaders killed by that 
regime.
    When we focus on China, they have tremendous power in our 
government and in our society because of the economic 
relationship, but it is not reciprocal. There are no lobbyists 
in Beijing working for trading partners of American companies 
or American companies themselves influencing Chinese policy. 
But the power that China has over Congress, because of its 
economic relationships, is enormous.
    For that reason, we rarely even threaten the much higher 
tariffs that would need to be threatened to eliminate what is 
the largest and most pernicious trade deficit in the history of 
the world.
    When we focus on digital, one important aspect of that is 
entertainment, and we have seen the power of the Chinese 
Government. As NBA stars fawn over each other as to who can 
apologize most for how the Uyghurs are treated, or in my own 
city, in Hollywood, where studios know that they will not have 
access to the Chinese markets if they ever make a movie about 
Tibet.
    Scathing reports have been issued by the global Federation 
of Labor, the ITUC, and the global service sector labor 
federation, PSI. And without objection, I would like to enter 
both of these reports into the record.
    They raise the issue of whether, through these 
international treaties, big tech can handcuff Congress before 
we can regulate them, before we can deal with monopolistic 
abuses, and can lock in a regulatory scheme favorable to 
themselves which Congress cannot change without the permission 
of dozens of other countries.
    But I want to focus also on financial services. As you 
know, I chair the Capital Market Subcommittee. There we saw 
Morgan Stanley, in effect, forced to recommend that its 
customers buy more Chinese stock in order to get access to the 
Chinese market. But I want it to focus on one particular aspect 
of this.
    Ms. Bliss, we have got to ensure that financial services 
firms are protected from the threat of forced data 
localization. That is one area where we have bipartisan 
agreement, both in the industry and from U.S. leadership.
    Do you agree that the Biden Administration should build on 
that foundation against this effort by many countries, but 
especially China, to say, Oh, the data has to be kept in that 
country so that then oppressive governments can have access to 
that data to oppress their people?
    How should the Biden Administration prevent these data 
localization initiatives?
    Ms. Bliss. Thank you, Congressman Sherman.
    And you really hit on what is one of our top digital 
priorities. We believe that data localization is pernicious, 
unjustified, and that I think the U.S. itself has worked out 
ways to ensure that regulators can get the information that 
they need, and if they cannot, they can resort to data 
localization, looking at the precedent that we have set on 
financial services in the USMCA financial services chapter.
    So we think that that is a good balance, and a good way to 
combat.
    But I absolutely agree that the elimination of data 
localization continues to be a major priority in the Indo-
Pacific where it is, unfortunately, a continuing problem. Even 
among allies like Korea, Indonesia, Vietnam, it is a huge 
problem. And so, I think prohibiting data localization has to 
be a continuing priority, no question.
    And let me also say----
    Mr. Sherman. I would just also comment the regime in Ho Chi 
Minh City and Hanoi is not an ally of the United States. And I 
look forward to a more formal regulatory dialog with China, as 
we have with the U.K. and, again, India on these digital 
issues.
    And I yield back.
    Mr. Bera. Great. Thank you.
    Let me now recognize the gentlelady from Missouri for 5 
minutes of questioning, Mrs. Wagner.
    Mrs. Wagner. Yes. I thank you, Mr. Chairman, and I want to 
thank our witnesses certainly for their time and expertise.
    As co-chair of the ASEAN Caucus, I am glad that this 
committee is examining the critical importance of trade and 
economic ties in the Indo-Pacific. China is determined to 
expand its influence throughout the region by subverting, 
replacing, or blocking the global rules and norms that the 
United States has championed for decades. Our partners in 
Southeast Asia are being increasingly targeted by China and are 
just absolutely desperate for the United States to show 
leadership and commitment.
    Sadly, this Administration has neglected to offer, I think, 
a robust and specific plan to deepen U.S. economic engagement 
in the region.
    The United States should be laying out a clear, a concrete, 
and a detailed roadmap for expanding economic and trade ties 
with Southeast Asia. My Southeast Asia Strategy Act, which I am 
proud to say was signed into law December 27th of 2021, will 
require the Administration to do just that.
    China wants to rewrite global economic rules, especially in 
the digital economy and other emergent sectors. The United 
States must be proactive in shoring up existing international 
standards and building out the foundational agreements for the 
economies of the future.
    This is why I was pleased to join Representatives Bera and 
Chabot in calling on the Administration to immediately begin 
negotiating a digital trade agreement for the Indo-Pacific. 
Vague promises to, quote, ``explore an economic framework for 
the Indo-Pacific'' will simply not be enough. China has already 
taken a number of actions to exert control over the development 
of digital trade rules, including by convening the PRC-led 
Regional Comprehensive Economic Partnership, or RCEP.
    RCEP includes extremely concerning digital policy 
provisions that benefit China's authoritarian model of digital 
regulation. I worry that if the United States allows RCEP to 
form the basis for international digital standards, there will 
be serious ramifications, especially for human rights.
    Ms. Bliss, how do RCEP digital provisions advantage 
authoritarian governments and help dictators restrict free 
speech and target vulnerable groups?
    Ms. Bliss. Thank you, Congresswoman. And thank you for the 
work on--as you co-chair the ASEAN Caucus and also for the 
legislation----
    Mr. Bera. Ms. Bliss, I would have you turn your camera on.
    Mrs. Wagner. Your camera is off.
    Ms. Bliss. Sorry. Now it is on. Thank you.
    So thank you for your work in this area. I think it is 
extremely important.
    And I think that it is critically important that the 
Administration, as you say, come out with a concrete plan. And 
I think our view would be that there are significant provisions 
that need to be added, and we need to not only--we need to 
build on USMCA and the agreement we negotiated with Japan on 
digital----
    Mrs. Wagner. Now, let me just say that I am concerned about 
this Regional Comprehensive Economic Partnership that is PRC-
led.
    Ms. Bliss. Yes. No, I was going to get to that.
    Mrs. Wagner. I have very limited time and more questions, 
please.
    Ms. Bliss. Right. So on RCEP, the way that it is so 
concerning is that there are flexibilities built in so that 
members of RCEP cannot observe various disciplines to the data 
localization provisions----
    Mrs. Wagner. Thank you, Ms. Bliss. Thank you. I am going to 
reclaim my time here.
    Let me ask another question. It is very clear that China 
also hopes to use digital rulemaking to insulate itself from 
sanctions and other economic consequences of their human rights 
abuses and violations of international laws.
    Ms. Bliss, if the United States does not take swift action 
to negotiate digital trade agreements, how might the PRC use 
digital rules to weaken our sanctions regime?
    How do we prevent this?
    Ms. Bliss. Well, again, if we do not get involved, I think, 
fortunately, there are other nations who are building a network 
that we are, unfortunately, outside of and will not benefit 
from. But I think that the PRC is being successful, both in 
terms of trying to extend its influence through--by joining 
CPTPP and also DEPA. And so, I think that is a threat that we 
need to face.
    And, so, to your question, as I understand it, it is how 
can--what kind of a threat does China really pose? And I think 
it is through the potential of joining CPTPP, DEPA, as well as 
its ongoing activities multilaterally.
    Mrs. Wagner. OK. Thank you.
    My time has expired. I appreciate the chairman's 
indulgence. And, Mr. Chairman, I have some other questions I 
will submit for the record, and I thank you very, very much.
    Mr. Bera. Thank you, Mrs. Wagner.
    Let me now recognize the gentleman from California, Mr. 
Lieu, for 5 minutes.
    Mr. Lieu. Thank you, Chairman Bera, for holding this 
important hearing.
    My question goes to Mr. Feith. The problems you identified 
seems to go more toward the fact that you have authoritarian 
countries versus free and open societies like the United 
States. So one reason that Russia was able to successfully 
execute, as our Department of Justice found, a sweeping and 
systematic attack of U.S. elections in 2016, is because in the 
U.S., we do not censor what people post on Twitter or Facebook.
    The fact that China can do all sorts of things to software 
companies and other businesses in China is very different than 
in the U.S., where our own U.S. Supreme Court has made it 
difficult to even patent a number of kinds of software.
    So when we have a free and open society, how is it that if 
we do any of these trade agreements, it will affect any of the 
concerns that you identified in your testimony? I am just 
curious how that would address the harms that you put out.
    Mr. Feith. Yes. Thanks for the question.
    I think, of course, the difference that you point out, you 
know, that is so fundamental between free and open society and 
the authoritarian society is enormous. And I think that there 
are areas where the problems of nonreciprocal trade and 
nonreciprocal digital trade and data exchange, essentially they 
are areas where we wouldn't be able to pursue remedies, and we 
wouldn't want to pursue remedies for the reasons that you say. 
If a reciprocal remedy is to try, you know, set up in America a 
censorship regime that looks like China, that is not appealing.
    But there are many other areas where I think, you know, an 
approach of a pursuit of a degree of reciprocity would be 
entirely consistent still with the free and open society at 
home, would be beneficial for national security interests 
around things like the protection of sensitive personal medical 
or genomic data, access to sensitive types of laboratories, 
corporate or academic, access to other sensitive sectors. And I 
think that some of these could be affected, you know, reformed, 
and approved by U.S. regulation or law in a fashion that is 
entirely consistent with remaining a free and open society 
here.
    Mr. Lieu. So what we are talking about is not any digital 
trade agreement with China? Right? It is with other countries? 
So I am still trying to understand how this would sort of 
address the harms that you say are emanating from countries 
like China?
    Mr. Feith. Oh, absolutely. My point was that there are 
certain benefits to derive from a digital trade agreement in 
the Indo-Pacific, but they are largely separate from the 
additional very important digital trade-related tasks of 
beginning to scrutinize and then selectively restrict some of 
the types of data exchange that we have with China. We wouldn't 
do that through a digital trade agreement with China. We would 
do that through mechanisms like this new ICTS regime, which is 
an interagency regime led by the Commerce Department, or you 
could do it through some of the legislative proposals that have 
emerged on the Hill.
    But, no, the idea is not that that would be done through a 
trade agreement.
    Mr. Lieu. All right. So I am a recovering computer science 
major, and I see how quickly technology moves. I believe it is 
impossible to stop technology. At most, we might go to 
regulated at its edges.
    Just look at TikTok. Try to ban it, like, good luck with 
that; right. We saw what happened.
    With Uber, what we saw happen is largely, my view is Uber 
broke a bunch of laws at the very beginning, but they went 
ahead and just did it. People liked the service, and now people 
use it.
    And so when digital technology moves that quickly, I have 
concerns about any sorts of regulation from Congress or 
treaties where it would be very hard to change if we get it 
wrong.
    Now, having said that, I do know we do have digital-free 
trade agreements with Australia, with Japan, with South Korea, 
with a number of other countries. So my question is, why do not 
we just do that? What if we simply went to Singapore and said, 
Hey, why do not we do a digital-free trade agreement? 
Indonesia, why do not we do that? Or in New Zealand, and so on. 
Why not just do it country by country?
    And that is for any member of the panel.
    Ms. Cutler. Perhaps I can just respond.
    I just think doing these types of agreements bilaterally 
doesn't produce the same kind of impactful result that you will 
get from working with a whole group of countries. And by 
getting a group of countries to agree to common rules, common 
standards, and common norms, it is much more impactful and, 
frankly, develops kind of a collective reaffirmation of the 
types of democratic principles and values that, you know, we 
are advocating.
    So, again, you can do it bilaterally, but I am not sure why 
you would want to.
    Mr. Lieu. Thank you.
    Ms. Bliss. If I could quickly jump in----
    Mr. Bera. The gentleman's time has expired.
    Let me go ahead and recognize the gentleman from Tennessee, 
Mr. Burchett, for 5 minutes of questioning.
    I think you are on mute.
    Mr. Burchett. I was making a play for bipartisanship. I was 
going to say--ask Ted Lieu if he would stay on for a minute and 
let her finish answering. She wanted to answer that question, 
and I was curious about that myself. If you'll go--and I will 
yield my time to do that. Just take a little bit because I am 
going to cut you off.
    Mrs. Kim of California. Mr. Chairman, was I recognized? I 
apologize.
    Mr. Bera. No. Mr. Burchett.
    I think Mr. Burchett is allowing you time to answer that 
question.
    Ms. Bliss. Well, you are very kind, Congressman. Thank you.
    Just very quickly, two points: One is--and I think this 
came out in Congressman Lieu's question, but also in a previous 
question that was posed, and that is that all of U.S. trade 
agreements enshrine the principle of the right to regulate. And 
I think that is a very important point to make in terms of 
concerns about the degree to which a trade agreement can 
constrain what the U.S. Government can do legislatively or 
administratively. So that is point one.
    And then point two, I just wanted to add that I think in 
terms of emerging technologies and how swiftly things are 
changing, an important point to make is one of the innovative 
provisions that the U.K. has included in its FTAs, which I 
think we ought to take a close look at as well, is a regulatory 
sandbox for digital regulation. And I think enshrining that and 
making that part of it is a good way of addressing the rapidly 
changing and evolving digital landscape.
    Thank you.
    Thank you again very much.
    Mr. Burchett. Yes, ma'am.
    I do not agree with Ted Lieu on much, but I wanted to hear 
what--he has been my buddy, so I wanted to make sure he got the 
answer on that.
    What can be done to protect against the Chinese Communist 
Party gaining control over our undersea fiberoptic cables and 
over the data that flows through them? Anybody can answer that, 
please.
    Mr. Feith. I am happy to take that, sir.
    On the undersea cables, I think broadly, somewhat crudely, 
there are perhaps three broad categories.
    One is the question of whether we, as a U.S. Government, 
support undersea cables being built directly from our country 
to China. That is something that the FCC basically put an end 
to over the course of the last several years. They stopped 
issuing new landing licenses for cables of that kind I believe 
in very early 2017. And then in June 2020 or so, they undid a 
previously granted plan that would have connected Los Angeles 
to Hong Kong. That was the Pacific Light Cable Network, and 
they said they are not going to license that to turn on--to 
touch from London--or rather from Los Angeles to Hong Kong. It 
is only going to go from Los Angeles to Taiwan and the 
Philippines.
    So the landing license that the FCC has authority over is 
one big one; but there are two other major areas of this that 
also would seem to relate to American data integrity and ally 
data integrity, which is to what extent Chinese companies, like 
the former Huawei subsidiary, HMM Tech, are welcome to build 
cables that if not touching the U.S. connects to other allies 
and partners of ours.
    So, for example, HMM Tech actually just landed for the 
first time in France. I believe this may have been the first 
time they landed in a NATO country----
    Mr. Burchett. I remember, but prior to that they were 
Huawei, right? They just changed their name to HMM. Is that 
pretty much the case?
    Mr. Feith. Huawei Marine was a subsidiary of the Huawei we 
all know.
    Mr. Burchett. I get it. I get it, yes.
    Mr. Feith. It is a bit of a kind of a--yes, bit of a 
corporate shell game. But, yes, it is the same company. They 
build cables.
    And so, I think there is a question, that is a question for 
us, about allied consultations and diplomacy, which is how much 
do we make it clear to our friends that we consider this a 
major data integrity risk when ally countries with whom we have 
sensitive, you know, communications might be inviting this 
Huawei affiliate into their critical telecommunications 
infrastructure to build new cables. And there is also the 
related matter of the maintenance of existing cables, where----
    Mr. Burchett. OK. I am going to run out of time, but--hang 
on, David. I am going to run out of time. What can we do to 
stop that?
    Mr. Feith. Well, again, I think at home you have domestic 
licensing authorities which the FCC has been using. 
Diplomatically we can encourage friends, to include the French 
and others, to reconsider these sorts of landings. There are 
also--essentially there are authorities, you know, for example, 
like DFC Financing, and Eximbank Export Credit that allow the 
U.S., or even the Japanese and European competitors of these 
Chinese undersea cable firms to give certain bidders more 
competitive pricing because Huawei in classic Chinese fashion 
seeks to underbid and win contracts that way.
    And I think all of those measures are things we should take 
very seriously as you are suggesting.
    Mr. Burchett. All right.
    Thank you, Mr. Chairman. Thank you for your indulgence. 
Appreciate it.
    Mr. Bera. Thank you.
    The chair now recognizes the gentlelady from Virginia, Ms. 
Spanberger, for 5 minutes of questioning.
    Ms. Spanberger. Thank you very much, Mr. Chairman. And 
thanks for our witnesses being here.
    I have long been concerned about China's growing influence 
as a leading supplier of 5G technology. Chinese control of this 
important telecom technology could threaten the privacy, the 
data, the security of American countries and certainly American 
consumers.
    So last Congress, I was very proud to introduce and pass, 
with a vote of 413 to 3, legislation that would require the 
Administration to develop and plan a counter Chinese monopoly 
plan and trajectory for us in the 5G space.
    And most recently, I was proud to cosponsor, vote for, and 
see signed into law the bipartisan Secure Equipment Act of 2021 
to remove potentially harmful equipment from our Nation's 
communication networks.
    So as sort of followup to this landscape of what we have 
done so far, I am curious, how could U.S. engagement with Indo-
Pacific countries foster a more diverse, resilient, or secure 
telecommunications ecosystem that supports our domestic 
priorities while also expanding our engagement in the region?
    And I will open it up to any of the witnesses who may want 
to speak to that, either in agreement or in disagreement with 
the premise of my question.
    Ms. Cutler. Well, I will start.
    I am in total agreement with the premise of your question. 
The whole idea of working with our partners and allies in the 
Indo-Pacific is to kind of build that ecosystem that reflects, 
again, our values, our norms, our priorities, taking into 
account their concerns and priorities as well. But the more we 
can work with them and develop this ecosystem, it is not going 
to be static. It will continue to expand into other areas, 
particularly as technology develops.
    So I think, you know, you are right on the mark with your 
question, and I think that is one of the important elements, 
and really the urgency now, of working with our countries to 
build that ecosystem.
    Ms. Spanberger. In looking at building that ecosystem, are 
there any suggestions that you all--again, I will open this up 
to any of the witnesses--would make to members of this 
committee in terms of either legislatively or things we should 
be thinking about as we are looking toward our partners and 
potential increased partnerships in the Indo-Pacific?
    Are there any things that you would point us to or things 
that you think we should be focusing on from a congressional 
standpoint?
    Mr. Feith. Congresswoman, I will take that quickly.
    One thing the U.S. Government has learned in recent years, 
sometimes through difficulty and frustration, is that as we try 
to make our own policy and consult with our friends about 
policy on the sorts of telecommunications infrastructure 
matters that you have raised, there is sometimes a problem of 
an inability to address the full relevant technology stack.
    And the previous question about undersea cables reflects 
that, where, you know, we had an explosion in interest over the 
last 5 years, let's say, in 5G where we basically ended up 
focusing our diplomacy aggressively and with some success, but 
quite narrowly, on the matter of terrestrial hardware, you 
know, which bay stations for terrestrial systems will our 
allies and partners install. And that is extremely important.
    But all of the same concerns apply to undersea cables. All 
of the same concerns apply to data centers and the cloud. All 
of the same concerns apply throughout that process, and we, in 
our system and very much with allies and partners, we found in 
our diplomacy that often, unless we made a specific, you know, 
point, but actually the concern that is about terrestrial also 
relates to undersea, it also relates to cloud, our counterparts 
wouldn't naturally make the inference.
    And I think as we do policy and legislating, we might 
fruitfully bear that in mind.
    Ms. Spanberger. And, Mr. Feith, you mentioned multiple 
times the diplomatic engagement and, you know, through our 
diplomatic discussions. And so, I would just note that we do 
need to have a very strong diplomatic presence across Asia, so 
I am personally--and I think many of my colleagues share this 
concern that so many of our Ambassador positions across the 
region, especially in Southeast Asia have gone unfilled, in 
some cases, for years. And so I think that this--it certainly 
has an impact on our ability to cooperate on shared U.S. 
interests, to include putting a check on Chinese expansionism, 
but also bolstering public health in their response to COVID.
    And so I wonder if you, in the closing moments that we have 
left, have any comments on that in terms of the necessity and 
value of having those positions filled?
    Mr. Feith. No. I would agree. It is extremely valuable, and 
the sooner the better.
    Ms. Spanberger. Thank you.
    Mr. Chairman, I yield back. Thank you very much for this 
hearing.
    Mr. Bera. Great. Thank you.
    Let me now recognize the gentleman from Kentucky, Mr. Barr, 
for 5 minutes of questioning.
    Mr. Barr. Thank you, Mr. Chairman. Thank you to our 
witnesses for your testimony.
    Let me especially thank Mr. Feith for what I think is the 
most salient point of this entire hearing, in his prepared 
testimony when he quoted General Secretary Xi Jinping in 
talking about data. And I will quote from Mr. Feith's testimony 
what the Chinese leader said. Quote, ``the vast ocean of data, 
just like oil resources during industrialization, contains 
immense productive power and opportunities. Whoever controls 
big data technologies will control the resources for 
development and have the upper hand.''
    Make no mistake, that is the modus operandi of the Chinese 
Communist Party.
    Beijing, indeed, recognizes that competition for global 
influence in the 21st century will require harnessing this 
data, dominating this data to achieve commercial, 
technological, military, and intelligence advantages.
    That is what it is doing. I want to flag that testimony. I 
want to highlight it. I want to underline it. That is what this 
hearing is all about, and we need to compete and we need to 
counter that threat.
    So, Mr. Feith, in response to that--and also I would invite 
our other witnesses to chime in here--tell us about the extent 
to which the Chinese-led Regional Comprehensive Economic 
Partnership is enabling China to obtain those advantages in 
data, and amplify whatever other threats RCEP poses to the 
rest.
    Mr. Feith. Well, thanks, Congressman. I appreciate your 
comments about the testimony.
    I will also happily defer on a lot of the RCEP details to 
my colleagues, you know, with USGR experience who are deeper on 
this.
    I would just say briefly, I think what RCEP does with 
respect to allowing China to continue to carry out this 
aggressive and mercantilist and predatory data strategy is 
mostly failing to check any of that in the Chinese system, 
which is to say that the rules in RCEP that relate to data, 
cross-border data flows, data localization are soft. They are, 
in some cases, I think non--kind of unenforceable because they 
are not subject to the mechanisms that do exist in that 
agreement.
    What makes it low standard is it basically allows 
governments to do as they please. And in the case of Beijing, 
doing as they please is the construction of this intensely 
controlled posture where, frankly, Beijing is succeeding at 
hoarding all of its own data and seeking to absorb all of the 
rest of the world's data through means either legal or illegal. 
And I think that is the challenge that it poses to us in 
recognition that we have national security concerns with the 
exposure of our data, and we all have intense competitive 
concerns with the control of data over time as an input into 
innovation and technology.
    Mr. Barr. Ms. Bliss, could you also offer your thoughts on 
that and particularly what threats RCEP poses, and what changes 
to the digital trade landscape in the Asia Pacific and the 
Indo-Pacific region going forward?
    Ms. Bliss. Yes. Well, I would largely agree with Mr. 
Feith's comments with respect to the weaknesses and the dangers 
of RCEP.
    And as I have previously said, I think, overall, the 
flexibilities that are built in in the agreement in terms of 
allowing a country, a member like China, to do as it pleases 
and impose its own policies is a real danger and risk to us.
    As Mr. Feith mentioned, the data localization and cross 
border flow provisions are incredibly weak and ineffective, and 
the fact that you have these kinds of standards in the ASEAN 
region with the significant GDP that it represents is extremely 
problematic.
    Mr. Barr. Reclaiming my time in the final time.
    Obviously, the Trump Administration pulled out of TPP. The 
Biden Administration is signaling a lack of interest in CPTPP. 
How do we prevent China from being part of that?
    Ms. Bliss. Well, I do not know if you are addressing it to 
all of us. I can start maybe just by saying I think China will 
have real hurdles, and it is of great concern that they have 
applied to join CPTPP. The good thing, however, is that the 
existing CPTPP partners have to agree on the application and 
on--China would have to agree to the conditions that were put 
on the terms of its accession and the negotiation that it would 
have to go through.
    So working with our allies, I think they would share our 
concerns, and I think there would be real questions as to 
whether China could actually meet the standards necessary to 
join CPTPP. But it is not a given, so it is an ongoing concern. 
But I do think the fact that that mechanism is in place, where 
you do have to get agreement in order to accede and go through 
negotiation, is at least a safeguard that is in place.
    Ms. Cutler. If I can just add, though, I think we need to 
take this--and this is in my testimony--very seriously, and 
just relying on our allies and partners to kind of block even 
the establishment of a working party to start those 
negotiations for China CPTPP accession, we cannot count on 
them. We are not in that agreement. We cannot block it. And 
even our allies and partners, guess who their largest trading 
partner is? It is China, where are their supply chains, you 
know, where they strengthen their supply chains and increasing 
their economic integration.
    And so, while it is important behind the scenes that we 
work with our allies and partners, there is nothing better that 
we can do than by getting back in the region economically, 
sharing our affirmative agenda, and getting others to sign on, 
and really lead the economic future of the Indo-Pacific.
    Mr. Barr. I agree with you, Ms. Cutler.
    My time is expired, and I yield back.
    Mr. Bera. Let me now recognize the gentleman from Virginia, 
Mr. Connolly, for 5 minutes of questioning.
    Mr. Connolly. Thank you so much, Mr. Chairman, and thank 
you for having this hearing.
    Ms. Cutler, was the whole issue of digital services and 
digital governance addressed in the TPP?
    Ms. Cutler. Clearly, parts of it were, but, frankly, that 
chapter is pretty outdated now. I mean, it was negotiated 
probably 10 years ago now, put into force 3 years ago. And so, 
you know, it would be significant updating----
    Mr. Bera. Mr. Barr, you have to mute yourself.
    Mr. Connolly. I would ask that my time be paused, Mr. 
Chairman.
    Ms. Cutler. I think I answered your question, so----
    Mr. Connolly. So I guess I want to get at, when the United 
States walked away from its own treaty that it had written, it 
had negotiated, the TPP, when Donald Trump decided to walk away 
from that, did that create a vacuum in terms of economic 
relationships in the broader Trans Asia Pacific region?
    Ms. Cutler. Well, it absolutely created a vacuum. And, you 
know, our trading partners, they got their act together to go 
forward with the CPTPP without us. Now, lucky for us, they kept 
most of the provisions intact. But as they go forward and China 
becomes, you know, increasingly interested in a lot of these 
arrangements, their ability and their interests in just 
pursuing what we want them to pursue, you know, is something we 
just cannot count on.
    Mr. Connolly. And it also created a vacuum, did it not, 
that China is actively filling?
    Ms. Cutler. Absolutely. I mean, the fact that the irony of 
all ironies is China applying to join the CPTPP.
    Mr. Connolly. Yes.
    Ms. Cutler. Whoever thought that, you know, that wasn't in 
the cards.
    Mr. Connolly. I mean to me, this was one of the most self-
inflicted wounds any great power could ever administer to 
itself.
    So here we have, you know, something like 40 percent of the 
world's GDP agreeing to enter into, you know, this regime that 
promoted liberal economic trade and investment and intellectual 
property protection, human rights, environmental standards, 
labor standards for the first time under the American 
protective channel. And we walk away from our own treaty, and 
that leaves those countries that were willing to partner with 
the United States sort of at the mercy now of, you know, 
outrageous fortune and the Chinese.
    What is a country like, for example, Vietnam to do absent 
the protective umbrella TPP would have provided?
    And are you seeing, as a consequence of that subsequently, 
countries either in tandem or individually cutting their own 
deals with China as best they can?
    Ms. Cutler. Well, I think RCEP is the testament to that. As 
long as the TPP negotiations were going on, frankly, there was 
a lack of interest in the RCEP negotiations. But the fact that 
15 Asian countries came together, including seven CPTPP 
members, and concluded RCEP that was brought into force earlier 
this month without us is really a testament to not only the 
vacuum we created, but their intent and their confidence to go 
forward without us.
    Mr. Connolly. You know, there were a lot of criticisms, 
especially, frankly, in my coalition, my Democratic coalition, 
about TPP and it did not meet the standards that we wanted. 
Does the Chinese agreement have human rights standards as part 
of the agreement?
    Ms. Cutler. I mean, RCEP is really just--the chapters are a 
subset of CPTPP. It does not include human rights, does not 
include State-owned enterprises, does not include labor, does 
not include environment, and the list goes on.
    Mr. Connolly. Ah. So while there were people who found TPP 
not entirely adequate, or not everything they wanted, what has 
replaced it has zero of that?
    Ms. Cutler. RCEP does, but let's keep in mind there is, you 
know, CPTPP----
    Mr. Connolly. No, no. I am only talking about RCEP now.
    Ms. Cutler. Yes, correct.
    Mr. Connolly. And I just think that is the threat. OK. 
Making perfect through the enemy of the grid has now hugely 
increased China's influence to the very region we were trying 
to counter it, and diminished our own because we walked away 
from our own agreement. And, oh, by the way, ironically, the 
standards you thought were inadequate are nonexistent under the 
Chinese umbrella.
    Ms. Cutler. And RCEP also is not a static agreement. It 
provides committees. It has a work program. And new rules will 
probably be discussed among the 15 countries going forward.
    Mr. Connolly. Thank you so much.
    Thank you, Mr. Chairman.
    Mr. Bera. Thank you.
    Let me now recognize the gentlelady from California, Mrs. 
Kim, for 5 minutes of questioning.
    Mrs. Kim of California. Thank you, Chairman Bera, and thank 
you, Ranking Member Chabot. And I want to thank all of our 
witnesses for joining us today, and, especially, Ms. Wendy 
Cutler. It is really good to see you.
    Leveraging U.S. engagement in the Indo-Pacific on digital 
economic opportunities is crucial toward securing U.S. national 
interest in the region and opening new doors for American 
commerce.
    So in my time in Congress so far, I have strongly urged the 
Biden Administration many times to pursue trade agreements that 
would implement new rules on cross-border data flows, 
restrictions on data localization, and protection of source 
code.
    Ensuring the secure movement of data across borders with 
countries that maintain similarly strong standards is critical 
toward promoting future digital trade that will bolster global 
commerce and boost technological innovation.
    As the world continues to evolve in the digital age, it is 
imperative that our policies and partnerships evolve with it, 
and that the U.S. is at the end of countering the technical 
authoritarianism and democratizing visual technologists.
    For these reasons, I led a letter with our fellow Members 
of Congress to the Biden Administration last November urging 
the President to reengage the Indo-Pacific on digital trade 
through new or updated bilateral, and plurilateral trade 
agreements. However, I have yet to see a response to my letter 
from President Biden, and this committee has yet to see any 
substantive action in the Indo-Pacific on pursuing new digital 
trade opportunities.
    So let me ask my first question to you, Mr. Feith. I would 
like to focus my questioning first on China's Digital Silk 
Road. Can you provide insight into the present challenges this 
poses to U.S. national security and economic interest in the 
Indo-Pacific? And what are potential responses Congress and the 
Administration can take to counter these challenges?
    Mr. Feith. Sure. Thank you for that.
    Well, so, the Digital Silk Road of China is essentially the 
digital component of the broader Belts and Road Initiative, or 
One Belt One Road strategy as the Chinese still say it in 
Chinese.
    And essentially there has been, I think, a lot of 
attention, justified attention on Chinese-built projects like 
ports that have themselves allowed Chinese military access or 
caused debt problems for the countries that received them. But 
actually the Digital Silk Road, which is to say the digital 
telecommunications infrastructure that is largely invisible, 
you know, harder to take a picture of than a port, is probably 
the more pernicious threat, as I think your question suggests.
    And perhaps--in brief, but the threats are two main types. 
One is simply to the data integrity, which is to say that when 
Chinese companies that are instruments of the State and are 
subject to coercion by the Chinese State are building undersea 
cables or, you know, mobile telephone infrastructure, 
infrastructure for, you know, commerce and government business 
in these third countries, all of that is subject to compromise 
by the Chinese State or by the Chinese security services. And 
that is a very big problem for the data integrity. And there is 
the related problem of the political influence that comes with 
it.
    These Chinese overseas infrastructure projects seem very 
often designed to basically insinuate the Chinese Communist 
Party into the local politics of these countries as a way of 
exerting some very effective long arm influence, and sometimes 
that is collecting information and----
    Mrs. Kim of California. Thank you, Mr. Feith. Yes, thank 
you. Thank you for your answer.
    In the interests of time, I would like to ask Ms. Cutler a 
couple of questions. Actually, I will just throw that all in 
there.
    What existing or potential future agreements offer the best 
frameworks for personally digital trade opportunities with the 
Indo-Pacific region? And what strategies do you realistically 
believe this Administration will pursue? And which countries 
will they primarily seek to partner with?
    And then if you can further provide the insight on 
opportunities that remain out there for a partnership with 
ASEAN member nations.
    Ms. Cutler. Well, thank you very much, Congressman Kim, and 
it is great to see you.
    Just in short, the Administration is soon to unveil its 
Indo-Pacific economic framework with details in all of the 
areas that they have listed, including digital standards and 
digital technologies. So I am expecting that we are all going 
to see a lot more very soon, which will include some kind of 
initiative on digital with our partners in the region.
    Now, when we talk about which partners, they are kind of 
the usual suspects, Australia, Japan, New Zealand, Korea, 
Singapore. But from my perspective, for any digital initiative, 
even for the overall framework to be effective, it needs to go 
broader than that, particularly with respect to including 
countries from Southeast Asia. And if that means there needs to 
be certain flexibilities to allow certain countries to sign on 
to certain obligations from the git-go, and then over time to 
phase in others, I think that is, you know, a worthwhile 
approach.
    So I think we will be seeing more digital very soon. I know 
both USTR and Commerce are working very hard to kind of build 
out that agenda, and there is a recognition that this is, you 
know, an important part of the overall framework.
    Mrs. Kim of California. Thank you.
    Thank you for allowing us to go over time, Chairman. I 
yield back.
    Thank you, Ms. Wendy Cutler.
    Mr. Bera. Thank you.
    Let me recognize the gentlelady from North Carolina, Ms. 
Manning, for 5 minutes of questioning.
    Ms. Manning. Thank you. Thank you, Chairman Bera and 
Ranking Member Chabot, for organizing this very important 
hearing. Thank you to our witnesses for sharing your expertise 
with us today.
    I would like to echo Representative Spanberger's concerns 
about the lack of envoys who have been confirmed throughout the 
region and, frankly, throughout the world, and how that is 
hampering our efforts and our ability to achieve trade 
agreements and other important agreements in this region and 
around the world. And many of those envoys and Ambassadors are 
awaiting confirmation in the Senate, and I think it is causing 
real harm to this country.
    I would also like to pick up on the issue that 
Representative Connolly raised, and that is the serious error 
that the Trump Administration made in walking away from the 
TPP, an agreement that we forged to create a significant 
regional alliance that would have been hugely beneficial to the 
U.S. in terms of trade and influence on the standards and 
behaviors in the region.
    And right now, as we are talking about all of these 
agreements that we have seen created between other countries in 
the region, we are basically being left out and we are being 
forced to play catchup.
    So, Ms. Cutler, you mentioned a little bit what you would 
hope to see is the Biden Administration release its Indo-
Pacific economic framework. I wonder if you could talk a little 
bit more about what you would like to see to reinforce our 
efforts to create a regional block that is more in line with 
our values and priorities.
    Ms. Cutler. Yes. I mean, what I would like to see are just 
details in all of these areas which show that this initiative 
overall is serious, that we are committed to the long term to 
economic ties with the region, and that it goes beyond just 
principles and best practices. It actually has rules, norms, 
and standards that we will be asking others to join us in 
embracing, and have some real tangible outcomes that really 
matter and are impactful.
    So whether it be in digital or in infrastructure or in 
clean technologies or supply chains, there is a lot to be done 
in all of these areas and, frankly, you know, we need to move 
quickly.
    Ms. Manning. Thank you.
    Ms. Bliss, since President Trump withdrew from the TPP in 
2017, and in the absence of any substitute engagement, can you 
talk to us about what the impact has been on U.S. companies in 
the region? In particular, what kinds of discriminatory trade 
barriers have we watched in the digital realm in the past few 
years?
    Ms. Bliss. Thank you, Congresswoman.
    What we have seen in particular is a continued rise in 
digital protectionism, and as I mentioned previously, 
particularly in the area of data localization requirements, and 
on restrictions on cross-border data flows, I can mention 
specifically--I mentioned Korea and Indonesia in particular as 
examples of where data localization measures are still 
significant problems for U.S. companies across the services 
sector. And so that, I believe, in part, is a direct result of 
the U.S. not participating and being able to be part of the 
TPP, and now CPTPP.
    But I will say, as previous witnesses have said, I would 
totally agree that, you know, we have gone beyond CPTPP and 
what we included in digital trade in USMCA, the U.S.-Japan 
agreement but, more importantly, I think what some of our 
trading partners are doing, Australia, Singapore, and the U.K. 
in particular, and there is some really strong innovative 
conditions that I think can be helpful in combating the rise of 
digital protectionism.
    So I think we need to look at those.
    Ms. Manning. Thank you.
    Mr. Feith, we have seen how China exerts pressure against 
American companies, like Apple, forcing them to store consumer 
data on Chinese servers, orcensor applications in return for 
market access.
    What can the U.S. do in our trade engagements to push back 
on these efforts across the region?
    Mr. Feith. It is a--frankly, it is a very difficult one in 
the sense that, you know, there are certainly some companies--
and Apple is a real example--that have made themselves very 
strongly dependent on what they can get only in China, in 
Apple's case in terms of the manufacturing supply chain and, 
therefore, they are in a position where they comply with even 
the very onerous and predatal or even fundamentally unfair and 
nonreciprocal laws and regulations that China imposes.
    I think that, you know, the ability to fix that, frankly, 
from Washington is limited, which I think is why the problem 
persists to such an unfortunate degree.
    I think in the long term, though, this digital and data 
trade discussion, you know, might need to point, you know, 
frankly, into a kind of a world that we feel like we cannot 
even really imagine at the moment, where essentially we have 
arrangements where countries that want to follow essentially, 
you know, democratic and liberal norms of data trade align 
ourselves into, you know, something of a data trade zone and a 
block, and actually consider over time, not only privileging 
each other, but actually imposing restrictions and tariffs on 
the likes of China and others who will continue to not follow 
these rules of, you know, reciprocal and open trade.
    Ms. Manning. Thank you.
    My time has expired, and I yield back.
    Mr. Bera. Thank you.
    I want to thank our members for their questions and to the 
witnesses for their responses.
    With member questions now concluded, I will move to my 
closing remarks and then recognize the ranking member for any 
closing remarks that he may have.
    I think, you know, for folks that are watching this, as 
well as for our witnesses and members of the Administration, 
you've seen bipartisan support for engagement and, you know, a 
desire from the members of this subcommittee, but I believe in 
a bipartisan-bicameral way, a desire for the United States to 
engage with the region in a way that, you know, doesn't 
disadvantage our workers, addresses environmental concerns, but 
also sets standards and norms for digital trade and, you know, 
beyond in the region.
    I think recent history also suggests, you know, with USMCA 
that with an inclusive process that does take time, does take a 
lot of effort, you can come up with a strong bipartisan 
agreement that it can be supported by labor, environmental 
groups, the business community, and others and has a strong 
standard.
    So I welcome the ability to work with the various groups, 
but also with the Administration as they engage and start to 
lay out their economic framework for engagement with the Indo-
Pacific. And I look forward to working with the ranking member, 
Mr. Chabot, and other members of this subcommittee as this 
process goes forward.
    And with that, let me go ahead and recognize the ranking 
member, Mr. Chabot, for any closing comments that he may have.
    Mr. Chabot. Thank you, Mr. Chairman. And let me commend you 
for holding a really excellent hearing, I believe, on a very 
important issue.
    As I said in my opening statement, countries throughout the 
Indo-Pacific are hungry for U.S. economic engagement. And I 
agree with you that the digital trade is a good place to start. 
Such an agreement would bring many benefits to the U.S. 
economy. And as the past chairman of the House Small Business 
Committee, I particularly appreciate Ms. Bliss mentioning the 
importance of a digital agreement for small-and medium-sized 
enterprises. The stakes are high if we sit on the sidelines.
    As our witnesses have said, the PRC is seeking to export 
digital standards to the rest of the world that are radically 
different from those that we would create. Unfortunately, this 
Administration's rather nebulous statements about an economic 
framework for the region really do not inspire a great deal of 
confidence that their strategy is up to the task.
    So I appreciate your leadership on this issue and look 
forward to working with you and our colleagues over on the Ways 
and Means Committee to make some progress on this critical 
area.
    And with that, I yield back.
    Mr. Bera. Thank you.
    And I want to once again thank our witnesses and the 
members who participated in this very important virtual 
hearing.
    And with that, the hearing is adjourned. Virtual gavel 
banging.
    [Whereupon, at 12:04 p.m., the subcommittee was adjourned.]

                                APPENDIX
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                   STATEMENT FOR THE RECORD CONNOLLY
                   
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            RESPONSES TO QUESTIONS SUBMITTED FOR THE RECORD
            
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       ADDITIONAL INFORMATION MATERIALS SUBMITTED FOR THE RECORD
       
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